Steve Waygood, Chief Responsible Investment Officer, Aviva
Please give us some background information on yourself and how your organisation plays a leading role in the climate risk agenda?
I lead the Global Responsible Investment team at Aviva Investors, working to ensure that ESG considerations continue to be fully integrated throughout our investment decisions on around £337 billion of assets under management, and exercising our belief that investing responsibly is the best way to deliver long-term, sustainable investment outcomes for our clients.
As an active manager, we take our stewardship role very seriously, using our influence as shareholders to shape corporate activity for the better. In the last 12 months, Aviva Investors have voted on over 54,000 resolutions at almost 4,200 shareholders meetings. As part of our Corporate Governance and Corporate Responsibility Voting Policy, we expect companies to report climate risks, strategy, policies and performance against TCFD recommendations, and we will vote against companies that we feel are not making sufficient progress in providing the market with appropriate levels of disclosure.
What will you be discussing at The Economist’s Climate Risk Summit?
One of the important areas in this debate is the value of assets at risk from climate change and how businesses, especially investors, manage the risks of transitioning away from them. We are at a point of climate emergency and this process must be kick-started. There is arguably the need for a Marshall Plan for the Planet, a discussion about when and how we make the TCFD mandatory, why we need to change Solvency II and other financial regulation and legislation, and how the UK can help lead on the international stage.
What’s the one thought you would like attendees to take away with them from the Climate Risk Summit?
This isn’t just an exercise in trying to save species and habitats – this is also about protecting people’s retirement income and their investments. The risks are as much financial as they are physical.
What are the biggest risks facing businesses when it comes to facing/dealing with climate change?
When we think about climate change, we tend to see the more obvious risks, such as damage to physical assets – from the destruction of crop harvests, through to building damage and geographical risks around coastal erosion, flooding, etc. But the asset management industry – and the clients we invest on behalf of – also face significant financial risks, which could mean material losses to savings and investments.
Research that we conducted with the Economist Intelligence Unit estimates that up to $43 trillion of assets are at risk of being wiped out between now and the end of this century as a result of climate change. That’s a staggering amount of money and represents about 30% of all manageable assets globally. If we don’t tackle climate change head-on, those numbers will spiral upwards on a frightening scale, impacting businesses, wiping out whole sources of income and destroying livelihoods.
The risk we face is a dearth of information about how climate change will materially affect businesses. Without this necessary information, the investment industry will struggle to accurately price these factors into valuations. If appropriate measures aren’t taken to bring its impact under control and improve corporate disclosure, in the long run we face not just an environmental disaster but also disastrous consequences for economies, businesses and society.
How can diverse stakeholders, governments, the private sector, academics and nonprofits more effectively collaborate to reach climate-related goals?
We can do far more collectively than by working in siloes. Businesses can be a force for good, but they don’t always get it right. By providing an effective, efficient framework, governments can catalyse meaningful change, aligning the interests of individuals, organisations and business with those of society and the planet.
An example of multiple stakeholders working together to achieve positive change is our work on the World Benchmark Alliance, which aims to provide access to publicly available rankings of companies based on their sustainability credentials as well as their contribution towards achieving the Sustainable Development Goals. The ambition is to increase transparency, understanding and engagement, so that corporate performance can be better aligned with sustainability objectives. Asset managers play a crucial role in this chain. We must ensure that we discuss the risks and opportunities from climate change with our clients, express their values and concerns in our engagement with companies, and reflect them fully in our investment actions.